CashNews.co
About 4.4 million UK households could see hikes to their mortgage repayments over the next three years, the Bank of England said.
The Bank’s Financial Policy Committee (FPC) said this will include £500-per-month hikes for the mortgages of around 420,000 households.
Meanwhile, between one million and 1.5 million people are set to see a second increase in rates, having already fixed to a higher price since interest rates started rising in the second half of 2021.
About 31% of all mortgages, or 2.7 million people, are expected to refinance onto a rate of more than 3% for the first time before the final quarter of 2027.
But the central bank stressed that UK lenders are still in a strong position to support households and businesses, even if the economic backdrop worsens.
The Bank’s latest Financial Stability Report showed that most households have already had an increase in their mortgage rates since borrowing costs began rising substantially.
After sharp rises in 2022 and 2023, interest rates started to fall from a 16-year-high of 5.25% earlier this year, with the central bank voting twice to cut the base rate in recent months, bringing it down to 4.75%.
About 37% of households with mortgages have not yet fixed to a new rate since interest rates started rising in the second half of 2021.
A typical household rolling off a fixed-rate mortgage in the next two years is due to face a jump of around £146-a-month, the report said – down on the last projection of £180 in June.
About 27% of mortgage holders, or 2.4 million people, are expected to see monthly payments decrease before the end of 2027, having already seen rates rise.
The central bank also said the overall risk environment for the economy and the financial sector has risen in the last six months after a swathe of new governments were elected across the globe.
The Bank said risks to the financial system from wars, trade tension and cyber attacks were on the rise, adding that growing geopolitical tensions pose a “significant” risk to banks and broader financial stability.
